Exclusive: TPP would include auto market opening for Japan - source

Fri Oct 2, 2015 7:49pm EDT
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By Krista Hughes and Ana Isabel Martinez

ATLANTA (Reuters) - A U.S.-Japan agreement on autos trade as part of a sweeping Pacific Rim trade deal would have its own dispute settlement mechanism, including penalties, if Japan does not open its market enough to U.S. vehicles, a source close to the negotiations said on Friday.

Negotiators are working to finalize a trade deal which would stretch from Japan to Peru and autos trade has been one of a few remaining and politically charged sticking points.

A broader deal on autos trade between Japan, the United States, Mexico and Canada was nearly complete, two people close to the closed door talks said, requesting anonymity because of the sensitivity of the negotiations.

"We are very close on cars," one of the people said near the end of the third day of ministerial level talks.

Remaining differences centered on "local content" thresholds for specific auto parts, a second person said.

The outline of the auto-related element of the Trans Pacific Partnership taking shape in negotiations in Atlanta would give Japan's automakers led by Toyota Motor Corp (7203.T: Quote) a freer hand to buy parts for vehicles sold in the United States from Asia.

But the deal would also contain a side agreement between the United States and Japan intended to open the Japanese market to American-made cars. It would also cut tariffs on Japanese vehicles exported to the United States, but over a period of time expected to be 20 years or more.

Although Japan does not impose tariffs on U.S.-made vehicles, U.S. automakers have complained for decades that the market is essentially shut to them because of barriers of other kinds, including difficulty in securing distribution networks and the need to meet separate safety certification.   Continued...

Trade ministers from a dozen Pacific nations in Trans-Pacific Partnership Ministers meeting post in TPP Ministers "Family Photo" in Atlanta, Georgia October 1, 2015. REUTERS/USTR Press Office/Handout